In charging documents filed earlier in June, a state investigator alleged Reeder in 2007 told his then-20-year-old daughter he was dying of cancer and that he wanted her “taken care of” after he was gone. Instead, the subsequent loan in her name ruined her credit and saddled her with debt.

Filing charges in April, prosecutors contended Reeder used longstanding friendships with people who’d known him as a child – now in their 80s – to scam them out of $2.6 million in a series of real estate schemes.

Outlining the new allegations, Steven Sherman, an investigator with the state Department of Financial Institutions, told the court Reeder approached his daughter – then a full-time college student with very limited income – and suggested he would buy a Snohomish property for her under her name.

The young woman initially declined, Sherman told the court, but Reeder insisted he was terminally ill and that the property would provide her with financial security.

“Semi-dependent on her father for her financial security, and scared for his health, (she) reluctantly agreed to go forward with his plan,” the investigator told the court.

Reeder then repeated the lies to his sister, a loan originator with Evergreen Home Loans, Sherman continued. With some hesitation, she agreed to prepare the loan application.

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“In actuality, Reeder was not suffering from a terminal illness, and there is reason to believe he wanted to acquire the Snohomish residence in order to subsequently ‘flip’ it for profit,” Sherman told the court. “Reeder enlisted his daughter to pose as a ‘straw buyer’ for this likely purpose.”

As a straw buyer, Reeder’s daughter obtained a loan in her name after claiming on loan applications that she was earning $7,000 a month as a property manager for her father’s companies. Sherman noted that, at Reeder’s direction, she also claimed she would be living in the home; lenders place “great weight” on that claim, he told the court, believing homeowners are less likely to default on a loan if doing so would mean eviction.

Evergreen MoneySource lent the young woman $370,500 to buy the property. The loan was finalized in August 2007.

Reeder assured his daughter he would make the payments on the home and lived there briefly, Sherman told the court. Within months, though, he stopped paying the loan and the mortgage defaulted.

“(Reeder’s sister) phoned Reeder to ask why he was causing this devastating financial problem for his daughter,” Sherman told the court. “Reeder responded with a stream of profanity and told (her) to ‘get out of (my) life.’”

In a last attempt to save her credit, Reeder’s daughter attempted to find a buyer before the property was foreclosed. That effort failed, and the house was auctioned off in July 2009 for $150,000 less than it had been purchased.

In addition to the loss to the lender, Reeder’s actions did lasting damage to his daughter’s credit, Sherman told the court.

On June 7, prosecutors charged Reeder with first-degree theft for the alleged fraud. Those charges follow 29 other charges related to what’s described as a wide-ranging fraud that ruined at least four people.

$2.6 million lost

In charging documents, state Department of Financial Institutions attorney Tyler Letey noted that Reeder told two men their $2.6 million investment would be used to develop land in Snohomish County and King County.

According to charging documents filed in April, Reeder’s investors believed they’d be silent partners in the real estate deal and relied on Reeder to manage the project. Instead of buying land, though, Reeder allegedly took a large portion of the money to the tables.

“He used the money to make large cash withdrawals, repay loans, pay for living expenses, and gamble at local casinos and in Las Vegas,” Letey told the court.

From October 2005 through July 2007, Reeder withdrew $870,000 in cash, the attorney said. More than $199,000 was withdrawn in Las Vegas.

In four months, one Mukilteo man who’d met Reeder at the Tulalip Casino in Marysville lost nearly $850,000 to Reeder, Letey told the court. Reeder, the attorney said, had promised a $2.5 million return on his investment.

Reeder offered the man false promises and visits to properties he claimed to be prepared to build on, but little documentation beyond a forged purchase and sale agreement for the first of four properties, Letey told the court.

Confronted by the investor, Reeder allegedly admitted to using the money to repay an old loan and to gamble in Las Vegas. The man hired an attorney and forced Reeder to sign a promissory note for a portion of the money invested, but was only able to secure a $25,000 “good faith” payment.

Letey also described a series of disingenuous transactions that saw Reeder take $1.7 million from a Seattle real estate investor.

According to charging documents, the Seattle investor extended Reeder loans meant to buy property in Bellevue and Lake Stevens. Reeder then explained away delays in purchasing either property; Letey told the court Reeder paid a friend $10,000 to pose as an investor interested in buying the Bellevue property.

Charge: Family friends used in scheme

The true owners of that property were siblings who’d known Reeder since he was a child, and had no interest in selling to him because of earlier dealings with Reeder, Letey told the court.

Investigators were told Reeder grew up in the neighborhood and began visiting the property in September 2005 to offer the owners investment advice.

According to charging documents, one of the siblings gave Reeder $200,000 to invest on his behalf, then agreed to allow Reeder to sell the property for $1.5 million. The man and his sister had a change of heart, though, and backed out of the deal before the land was deeded to Reeder.

The siblings ultimately filed a police report after Reeder failed to return the $200,000, but withdrew the allegations when Reeder repaid the money. Letey told the court investigators learned the money Reeder used to pay back the debt came from the Mukilteo man’s investment in Reeder’s real estate scheme.

The Seattle investor ultimately won a civil judgment of $2.8 million against Reeder, according to charging documents. That judgment has not been paid.

Investigators later learned that Reeder took his investors’ checks to the issuing bank, had cashiers' checks issued and then cashed the cashiers' checks at his bank, according to charging documents.

Most of the money was never deposited, and investigators have not been able track the much of it, Letey told the court. More than $600,000 remains unaccounted.

One investor and a “former friend” told investigators Reeder was gambling heavily at the time, Letey said. He frequently played the table limit at the Tulalip Casino and the Bellagio in Las Vegas.

Prosecutors have asked that Reeder be held on $50,000 bail. He is charged with 14 counts of securities fraud and 15 counts of first-degree theft, in addition to the new first-degree theft charge.

Reeder has pleaded not guilty to the earlier 29 charges. He has not been jailed in the case.